If anyone has raced ahead with AI adoption, it’s the finance industry. The rise of AI goes hand in hand with the wave of FinTech services and applications that have surfaced in recent years. From automating the approval of loan applications and spotting fraud to personalised services and cryptocurrencies, these applications save time, reduce errors and ultimately save money. This makes them a lucrative investment for banks, who seem to be at the forefront of the AI revolution, showing other industries that making bold changes and engaging with these technologies is worthwhile.
But FinTech isn’t limited to banking, in fact, a huge goal of the FinTech industry is to be more accessible and inclusive as is apparent in services like peer-to-peer lending, crowdfunding, and services that make it easier to send money abroad. Innovative FinTech start-ups are turning to alternative forms of data to create products tailored to their customers' financial lives. And while these technologies can be liberating, opening doors to communities not previously able to access the financial system, there is also the danger of those communities being exploited.
We’ve already seen some amazing applications of FinTech in over the past few years such as emerging digital neobanks, small business finance solutions, InsurTech for low-income consumers and consumer financial health, but what can we expect in the coming years? Here is a round-up of the expected trends in FinTech for 2020, according to members of the Forbes Financial Council.
1. Regulation Technology
RegTech is rapidly growing on the back of the financial services industry and is only set to keep going. With so many regulation compliance tasks still being completed manually, it’s one of the largest business overhead expenses, meaning there is plenty of scope for new RegTech solutions in the market with a goal of streamlining processes and reducing costs.
2. The Rise Of Decentralised Finance
At one time, FinTech was restricted to solutions based on modern-looking interfaces that were ultimately still tied to legacy financial technologies used by banks, until blockchain came into the picture. Blockchain provided a bypass of these systems and the associated fees and time delays and there is still market space for more decentralised and hybrid solutions.
3. Institutional Adoption Of Cryptocurrency
There has been a rising interest in cryptocurrencies from professional traders and institutions which continues to rise with the potential for value appreciation and advances on the regulatory front. Crypto-native companies are advancing their institutional-grade custody solutions to meet more complex demands allowing the market to pick up.
4. Crypto-To-Cash Conversions
While cryptocurrencies grow stronger among institutions, general interest also grows and new products are likely to emerge including ways to cash out on the currencies, particularly while the regulations around the area are still fuzzy.
5. Large ‘A’ Rated Life Insurance Carriers
Where there are large financial gains there is also a FinTech solution, so shifting from the banking industry, FinTech is due to make big waves in the insurance industry through simplifying and speeding up the writing and underwriting of new insurance policies, saving money.
6. Increased Co-Development And Joint Ventures
We can expect more co-development and joint ventures to pop up as FinTechs become more accepted as a replacement for many proprietary legacy systems, empowering sectors and industries with historical inefficiencies and expenses. FinTechs are lowering the cost of sale in back-office solutions and ancillary services to nontraditional financial services participants.
7. More Partnerships Among FinTechs
We can also expect to see more partnerships occurring between FinTechs as they realise the benefits of their combinative power. By partnering up, Direct-to-consumer FinTechs that were previously hyper-focused on one piece of the market can now offer a more complete lifecycle with their customers by delivering additional relevant products and services.
8. Non-Fintech Players Entering The Space
Large non-FinTech companies such as retailers and technology platforms are entering the space to take their share of the financial gains and grow their customer base. On the contrary, large FinTech players are expanding into other areas of finance such as lending to cover more ground.
9. Financial Health All-round
As previously mentioned, several FinTechs share a common goal of making financial health a priority. LendingClub, for example, has a “chief financial health officer.” As the market matures, the industry is evolving beyond products that mostly deliver near term returns to investors, but more holistic offerings that invest in the long-term success of their customers, building deeper and more trusting relationships with longevity.
10. Use Of Fintech For Protection
Staying with the "FinTech for good" theme, solutions are arising to protect vulnerable consumers, from naive teens to unsavvy senior citizens who may be targets of financial fraud. New technology is on the rise for prepaid Visa cards that block suspicious actions, enabling financial independence to continue while keeping assets protected.
11. Simplified Fintech Products
Developing simplified and more consolidated FinTech products will be the key to winning customers and staying ahead, so we can expect to see this trend rise over the foreseeable future. In particular, retail establishments are expected to develop turnkey mobile payment and processing systems.
12. Robotic Process Automation
Robotic process automation (RPA) has made undeniable gains in the industry and could be the most helpful tool out there. Bots can maintain records and transactions, make calculations and perform tasks that include queries. Almost anything can be automated saving time and money. If it can’t be fully automated, you can still save time that can be allocated to high priority functions, like client support.
You can now get your hands on a low-cost RPA solution at GoSmarter, offered as support for companies recovering from coronavirus.
All in all the FinTech industry continues to boom into 2020, constantly throwing out new trends for all players to keep an eye on.